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A Real Alternative to Bankruptcy
If you are a small business owner or president, and are considering a Chapter 11 Bankruptcy, you should carefully review the changes in the new law, which took affect on October 17, 2005. The new law (BAPCPA) named “The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” has not only made it much tougher for consumers filing bankruptcy, but has also included several changes that are not friendly to small business owners.
A small business, under this new Bankruptcy law is defined as any business with $2,000.000. in debt or less. Here are a few of the provisions that will make filing a Chapter 11 Bankruptcy much riskier for a small business. |
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- There are significantly more reporting requirements and additional paperwork.
- Your books will be examined by the Bankruptcy Trustee to ensure your company has a plan to succeed. If the trustee determines the company does not have a good chance of surviving, he/she can move the case from a Chapter 11 to a Chapter 7.
- Sole Proprietors may now be forced to file bankruptcy protection as individuals if the bankruptcy judge determines that most of their debt is personal.
- The time period for a company to decide whether to keep or reject it’s non-residential real property lease changes to 120 days. Previously, filers could extend the current 60-day deadline many times, sometimes drawing out the process for year
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In short, bankruptcy is now a less desirable option for many businesses that are burdened by heavy debt and the various disruptions placed on them by their creditors trying to collect. Fortunately, there are alternatives for the small business owner to consider. The most effective one could well be an out of court debt relief program through the American Finasco Debt Resolution Plan.
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